Enzymatic activity present in liver microsomes from rats slowly hydrolyzed N-(4-hydroxyphenyl)retinamide (4HPR). A product of the reaction was all-trans-retinoic acid. The reaction, which had a pH optimum greater than 8.6, was stimulated by divalent cations, particularly Mn2+. Enzyme activity was highest in liver microsomes but was also present in kidney microsomes, liver cytoplasm, and spleen cytoplasm. Of 10 possible substrates tested, the 13-cis- and all-trans-forms of N-ethylretinamide were most active. The all-trans-form of 4HPR was much more active than the 13-cis-form. Neither 13-cis- nor all-trans-retinoyl leucine was a substrate. Because no detectable [14C]all-trans-retinoic acid could be found in the livers of rats after doses of [14C]4HPR, we conclude that this enzyme is not extensively active in intact animals.